LLC vs. Sole Trader vs. Independent Activity: which form to choose in 2026

Until 1 January 2026, choosing a legal form for a new business in the Republic of Moldova came down, in practice, to two options: a Limited Liability Company (LLC) or a Sole Trader (ÎI). Starting this year, the entry into force of Law no. 228/2025 introduced a third option — the independent entrepreneur — reshaping the decision for a broad category of entrepreneurs: freelancers, consultants, IT developers, service providers.

This article analyses the three forms through four lenses: tax regime, administrative complexity, legal liability and practical applicability. The goal is not to recommend a single option, but to offer a framework through which each entrepreneur can identify the form that fits their specific situation.

The fundamental distinction: legal entity vs. natural person

Before going into the details of each form, it is essential to clarify a distinction frequently overlooked in popular discussions:

The LLC is a legal person (persoană juridică) — distinct from its founders, registered as such with the Public Services Agency, with its own assets, accounting and tax obligations. Its founders’ personal patrimony is shielded.

The sole trader (ÎI) is NOT a legal person, contrary to a widespread misconception. Under the Civil Code and Law no. 845/1992 on entrepreneurship, the individual entrepreneur “conducts entrepreneurial activity in their own name and at their own risk, without establishing a legal person.” The ÎI is registered with the ASP, but in legal relations it acts as a natural-person entrepreneur — which is precisely why liability is unlimited.

The independent entrepreneur is also a natural person, operating under a new tax regime (Law no. 228/2025, Chapter 10⁴ of the Tax Code) without any state registration of an enterprise. The difference compared to the ÎI is fiscal and procedural, not in legal nature.

In short: of the three forms, only the LLC is a legal person. ÎI and independent entrepreneur are both forms of natural-person entrepreneurship — and that single fact determines liability, asset protection and how creditors can pursue debts.

LLC — the universal legal form

The Limited Liability Company remains the most versatile legal form and the most suitable for businesses with growth potential, multiple shareholders, or complex operations.

Main characteristics

• Limited liability: shareholders are liable for the company’s obligations only up to the amount of their contribution to share capital. Personal assets are protected.
• Share capital: the law sets no statutory minimum (art. 21 of Law no. 135/2007 simply states that the share capital is formed from associates’ contributions); in practice, the amount is set by the founders, often symbolic.
• Shareholders: minimum 1 (single-member LLCs are allowed under art. 18); no statutory maximum — the prior 50-associate cap was removed by Law no. 229/2023. A 200-associate ceiling applies only to LLCs constituted as investment vehicles in crowdfunding projects.
• Registration: with the Public Services Agency (ASP); in 2026 the procedure is fully digitalised via servicii.gov.md.

Tax regime in 2026

• Corporate income tax: 12% on taxable income
• 4% turnover regime: optional, for eligible small companies that are not registered as VAT payers (with restrictions — notably, business and management consulting cannot exceed 60% of sales revenue)
• VAT: 20% standard rate; mandatory registration when annual taxable supplies exceed 1,500,000 MDL (raised to 1,700,000 MDL from 1 March 2026)
• Dividends: 6% withholding tax, payable by the company
• Salaries: employer social contributions (CAS) 24%, employee CAS 6%, health insurance (CNAM) 9%, income tax 12%

Additional 2026 benefit: Law no. 318/2025 extended through fiscal period 2026 the option to defer corporate income tax for small and medium-sized enterprises (up to 249 employees and either annual turnover up to 100 million MDL or total assets up to 100 million MDL) that do not distribute profit as dividends. The deferred tax becomes due by the 25th of the month following the month in which dividends are paid. For growing LLCs that reinvest, the benefit is significant.

Estimated annual operating costs

• Outsourced accounting services: between 18,000 and 84,000 MDL/year (depending on volume)
• Audit (where applicable): from 15,000 MDL/year
• Software, electronic signatures, administrative fees: approximately 5,000–8,000 MDL/year

When to choose LLC

• You have or anticipate multiple shareholders
• You will have employees
• You work with corporate clients, foreign partners, investors
• You want personal-asset protection
• Projected turnover exceeds 1,200,000 MDL/year
• The activity involves significant legal risks (litigation, warranties, returns)

For a detailed walkthrough of the registration procedure, see our full guide on how to open an LLC in Moldova in 2026.

Sole Trader (ÎI) — flexibility with extended liability

The Sole Trader is a natural-person form of entrepreneurship (not a legal person, as widely misunderstood), often chosen for administrative simplicity. The decisive consequence: unlimited personal liability of the founder.

Main characteristics

• Legal nature: not a legal person; the individual entrepreneur acts in their own name and at their own risk (Civil Code, art. 26; Law no. 845/1992).
• Unlimited liability: the founder responds for ÎI obligations with their entire personal wealth.
• Single founder: a natural person may have only one active ÎI.
• Registration: with the Public Services Agency (ASP).
• Share capital: not applicable — there are no shares, only the entrepreneur’s own assets.

Tax regime in 2026

A sole trader may apply:

• Standard regime: 12% income tax on business activity
• 4% turnover regime for eligible entities (non-VAT-payer, with the same restrictions as for LLCs)
• VAT: same thresholds as the LLC (1,500,000 MDL; 1,700,000 MDL from 1 March 2026)

From a tax standpoint, sole trader and LLC are almost identical. The main difference is of a legal nature, not a fiscal one.

Operating costs

Similar to LLC, with a slight reduction due to marginally lower complexity (audit is generally not mandatory for small sole traders).

When to choose Sole Trader

• You have a simple business with low operational risk
• You work alone or with family support
• You do not anticipate the need to attract investors or partners
• You want a less formal structure than an LLC
• The activity is, by nature, low-risk (consulting without material warranties, translations, small services)

Caution: unlimited liability is not a technicality. In the event of litigation or commercial debt, creditors may pursue even the founder’s apartment, car or personal savings. This is the main reason why, whenever in doubt, the LLC remains the safer choice.

Independent entrepreneur — the new regime from 2026

Starting 1 January 2026, Law no. 228 of 10 July 2025 (published in the Official Gazette on 29 August 2025) introduces an entirely new tax regime, designed for natural persons providing services, by adding Chapter 10⁴ — “Tax regime for independent entrepreneurs” to Title II of the Tax Code. This is, unambiguously, the largest structural change in the Moldovan tax system in recent years.

Who can apply

• Natural persons resident in the Republic of Moldova
• Who provide services on an individual basis (trade in goods is prohibited under this regime)
• Whose activity falls within the list of roughly 40 CAEM-2 (Moldovan economic activity classifier) codes provided in the annex to chapter 10⁴: programming, IT, design, consulting, translations, artistic activities, photography, professional training, digital marketing and others
• Cannot have employees — the regime is strictly for individual activity
• Annual revenue up to 1,200,000 MDL

Tax regime

• Standard rate: 15% on annual income up to the threshold of 1,200,000 MDL
• Increased rate: 35% on the portion of income exceeding this threshold
• “All-inclusive” content: the single tax replaces income tax, social contributions (CAS), health insurance (CNAM) and local taxes

Simplified obligations

• Zero tax or statistical reports
• No mandatory accounting
• Online registration with the Public Services Agency (ASP) via servicii.gov.md, signed with MPass / mobile electronic signature
• At least one dedicated bank account for the activity (multiple accounts in different banks and currencies are permitted)
• Cash register connected to the State Tax Service’s electronic sales-monitoring system is mandatory for cash collections
• Monthly tax computed by the STS, payment notice issued by the 10th of the following month, settlement by the 25th

Social rights

The independent entrepreneur is a fully insured person in the state system: pension, health insurance, temporary incapacity benefit, maternity benefit, paternity benefit, allowances for families with children.

The key risk: reclassification as an employment relationship

Here lies a legislative trap that no freelancer — or company working with one — can afford to ignore. The amendment to article 88 of the Tax Code, which entered into force together with Law no. 228/2025, expressly provides that the relationship between an independent entrepreneur and a beneficiary that does not meet the conditions of art. 24 of the Tax Code is qualified, for tax purposes, as an employment relationship — and is taxed as such.

In practice, if a freelancer:

• Works exclusively for a single beneficiary
• On an imposed schedule
• With the beneficiary’s equipment
• Under conditions of subordination

…the STS (State Tax Service) may retroactively reclassify the relationship as employment, with all the consequences: employer CAS 24%, employee CAS 6%, CNAM 9%, income tax 12% — owed for the entire period, plus penalties and late surcharges.

When to choose independent entrepreneur

• You provide services in the fields listed in the annex (IT, design, consulting, translations, etc.)
• You work with multiple clients, not a single beneficiary
• Annual income will stay below 1,200,000 MDL
• You do not intend to hire people
• You want minimal bureaucracy and tax predictability
• You operate independently, without real subordination to any client

Synthetic comparison

Decision framework in three practical scenarios

Scenario 1: Software developer working remotely for 3–5 international clients Recommendation: independent entrepreneur. Minimal bureaucracy, predictable tax, social rights included. Mind the 1,200,000 MDL threshold, though — as it approaches, transitioning to an LLC (potentially an IT Park resident) becomes necessary. For details, see the full Moldova IT Park 2026 guide.

Scenario 2: Two partners opening a marketing agency with the intention to hire Recommendation: LLC. Multiple shareholders, hiring intent, liability protection — every condition argues for an LLC. Sole trader is excluded from the start because it allows only one founder.

Scenario 3: Solo consultant working exclusively for one corporate client Caution: none of the “freelancer” forms is safe here. The relationship will, with high probability, be reclassified by the STS as an employment relationship. The correct solution is either hiring under an individual employment contract, or restructuring the relationship so that the consultant demonstrably has multiple clients and operational autonomy. See also the 5 common accounting mistakes in LLCs, which details reclassification risks.

Conclusion

The three forms are not interchangeable. Each answers a distinct profile of activity, risk and ambition. The LLC remains the reference form for growing businesses; the sole trader serves simple, low-risk activities; the independent entrepreneur is a well-calibrated tax novelty for genuine freelancers, but dangerous for those who are, in reality, disguised employees.

The costliest mistake in 2026 is not choosing the “wrong” form, but choosing a form that does not match the real way of operating. A tax audit does not assess what is printed on the company’s stamp — it assesses how the activity is actually carried out. And the retroactive reclassifications introduced by the amendments to the Tax Code effective 1 January 2026 leave less and less room to manoeuvre.

How ExpertCont can help

The ExpertCont team assists entrepreneurs in the Republic of Moldova across all three paths: registration of LLCs and sole traders, ongoing accounting in accordance with the applicable regimes, and advisory on the new independent-entrepreneur regime — including legal analysis of reclassification risk.

For companies and freelancers at the decision point, we offer a free consultation in which we evaluate:

• The optimal legal form for your activity (with comparative tax calculation)
• Reclassification risks in light of the new 2026 provisions
• The correct structuring of service contracts through legal services
• Accounting and tax setup after registration through accounting services
• Medium-term financial planning through business consulting

Book your free consultation:

📞 +373 60 82 55 81 📍 str. Alexandru cel Bun 51/A, et. 5, Chișinău, MD-2012

ExpertCont — your trusted partner for accounting and legal consulting in the Republic of Moldova.